Asia shares try to rally, retail crowd catches silver bug

Japan's Nikkei added 0.8 per cent, after shedding almost 2 per cent on Jan 29, 2021.
Japan's Nikkei added 0.8 per cent, after shedding almost 2 per cent on Jan 29, 2021.PHOTO: EPA-EFE

SYDNEY (REUTERS) - Asian shares tried to rally on Monday (Feb 1) as Wall Street continued to struggle with doubts about vaccine rollouts and economic recovery, while silver surged as newly empowered retail investors turned speculative eyes to precious metals.

MSCI's broadest index of Asia-Pacific shares outside Japan recouped early losses to rise 0.7 per cent, bouncing after four straight sessions of losses.

Japan's Nikkei added 0.8 per cent, after shedding almost 2 per cent on Friday, while Chinese blue chips gained 0.5 per cent as the country's central bank injected more cash into money markets.

Singapore's Straqits Times Index was down 0.9 per cent at 10.44am local time.

Wall Street indexes pared their losses but futures for the S&P 500 were still off 0.3 per cent, while Nasdaq futures fell 0.4 per cent.

Dealers were also warily awaiting new developments in the headline-grabbing battle between retail investors and funds that specialise in shorting stocks.

US hedge funds bought and sold the most stock in more than 10 years amid wild swings in GameStop, according to an analysis by Goldman Sachs.

Talk was that silver was the new target for the retail crowd as the metal jumped 5 per cent to a six-month high.

Yet many analysts see this entertaining episode as a sideshow compared to signs of a loss of momentum in the United States and Europe as coronavirus lockdowns bite.

Indeed, two surveys from China showed factory activity slowed in January as restrictions took a toll in some regions.

Neither was the news on vaccine rollouts positive, especially given doubts about whether they will work on new Covid-19 strains.

"It is these considerations, not what is happening to a video gamer retailer day to day, that has weighed on risk assets," said John Briggs, global head of strategy at NatWest Markets. "So much of the market's valuations, risk in particular, is premised on the fact we can see a light at the end of the Covid tunnel."

Doubts have also emerged about the future of President Joe Biden's US$1.9 trillion (S$2.5 trillion) relief package, with 10 Republican senators urging a US$600 billion plan.

The jitters in stocks caused only a brief ripple in bonds with Treasury yields actually rising late last week, perhaps a refection of the tidal wave of borrowing underway.

A record US$1.11 trillion of gross Treasury issuance is slated for this quarter, up from US$685 billion the same time last year.

On Monday, US 10-year yields held at 1.077 per cent and near the recent 10-month top of 1.187 per cent.

Higher yields combined with the more cautious market mood have seen the safe-haven dollar steady above its recent lows. The dollar index stood at 90.535, having bounced from a trough of 89.206 hit early in January.

The euro idled at US$1.2129, well off its recent peak at US$1.2349, while the dollar held firm at 104.70 yen.

Gold followed silver higher to US$1,852 an ounce, but has repeatedly stalled at resistance around US$1,875.

Global demand concerns kept oil prices in check. US crude was flat at US$52.20 a barrel, while Brent crude futures edged up 10 cents to US$55.14.